3. CALIFORNIA PV MARKET
US market info (2)
PV capacity additions per type PV installed costs evolution
Source: US Solar Industry year in review 2009 (SEIA)
4. CALIFORNIA PV MARKET
US market info (3)
Source: Global PV market outlook until 2014 (EPIA)
6. CALIFORNIA PV MARKET
California market info (1)
Renewable Portfolio Standards:
— 2010: Electric utilities must generate 20 percent
of their electricity from renewable resources.
— 2020: Electric utilities must generate 33
percent of their electricity from renewable
resources*.
*No solar or PV minimums in California.
9. CALIFORNIA PV MARKET
Utilities map
California main utilities:
- Pacific Gas and Electric Company (PG&E)
- Southern California Edison (SCE),
- San Diego Gas & Electric (SDG&E).
Source: California Public Utilities Commission (CPUC)
10. CALIFORNIA PV MARKET
PG&E Average Bundled Rates by Class 2000-10
18,0
17,0
16,0
h 15,0 Residential
W
k 14,0 Sm/Med Commercial
r
e 13,0 Lg Commercial/Ind
p
s
t 12,0 Agricultural
n 11,0
e Street Lighting
C 10,0
System Average
9,0
8,0
7,0
6,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Residential 10,7 12,8 13,3 13,2 12,7 12,9 14,3 15,2 15,0 16,3 16,3
Sm/Med Commercial 10,2 14,2 15,6 15,7 14,3 14,1 14,5 15,1 14,7 16,4 16,9
Lg Commercial/Ind 7,1 10,6 12,6 12,5 11,3 11,2 11,7 11,5 10,7 12,4 12,6
Agricultural 11,1 13,1 13,7 13,8 11,7 11,8 12,2 12,4 13,2 14,2 14,2
Street Lighting 12,3 16,0 17,6 17,0 15,1 15,0 15,9 17,2 15,6 16,5 16,2
System Average 9,7 12,7 14,0 14,0 12,9 12,9 13,8 14,0 13,7 15,2 15,3
Source: California Public Utilities Commission (CPUC)
11. CALIFORNIA PV MARKET
SCE Average Bundled Rates by Class 2000-10
20,0
19,0
18,0
h 17,0
Residential
W 16,0
k Sm/Med Commercial
r 15,0
e
p 14,0 Lg Commercial/Ind
s
t 13,0 Agricultural
n 12,0
e Street Lighting
C 11,0
System Average
10,0
9,0
8,0
7,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Residential 11,5 13,0 13,5 12,8 12,5 12,9 14,8 14,8 15,0 15,5 15,9
Sm/Med Commercial 10,4 13,7 15,8 14,4 13,5 13,6 15,6 15,6 14,6 15,0 15,3
Lg Commercial/Ind 7,7 10,6 12,6 11,2 9,9 10,0 12,3 11,9 10,9 10,7 10,8
Agricultural 8,7 10,6 11,1 9,9 9,4 9,5 10,7 11,3 11,1 10,9 11,5
Street Lighting 13,9 15,8 17,3 15,5 14,7 14,0 15,4 16,9 19,5 19,2 19,2
System Average 10,0 12,5 14,0 12,9 12,2 12,4 14,3 14,3 13,8 14,0 14,3
Source: California Public Utilities Commission (CPUC)
12. CALIFORNIA PV MARKET
SDG&E Average Bundled Rates by Class 2000-10
19,0
18,0
17,0
h Residential
W 16,0 Small Commercial
k
r
e 15,0 Medium & Large C&I
p
s
t 14,0 Agricultural
n Street Lighting
e 13,0
C System Average
12,0
11,0
10,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Residential 11,3 13,7 14,3 14,6 14,3 14,6 15,4 16,0 15,6 18,1 17,7
Small Commercial 11,7 14,0 16,5 16,9 17,2 16,8 15,8 16,8 16,0 18,5 17,7
Medium & Large C&I 11,8 12,1 12,6 12,3 11,8 11,7 11,8 13,2 13,6 15,4 14,2
Agricultural 16,5 15,2 15,5 14,9 14,0 13,8 14,3 15,9 15,6 17,9 17,2
Street Lighting 11,0 12,9 14,9 15,3 16,4 16,1 14,2 15,2 14,7 15,9 15,5
System Average 11,4 12,8 13,6 13,5 13,2 13,3 13,5 14,5 14,5 16,7 15,9
Source: California Public Utilities Commission (CPUC)
13. CALIFORNIA PV MARKET
Forecast of electricity consumption
Source: California Energy Demand 2010-2020 (California Energy Commissin)
14. CALIFORNIA PV MARKET
Energy price forecast
- Since 2000 prices have increased on
average 6-7% a year.
- Future estimations foresee a similar
increase in the 2010-2020 period
because of three factors:
> New infraestructure development
> Increase in gas & oil prices
> Renewable energy requirements
Source: Understanding California Enery Prices (Bloomenergy)
15. CALIFORNIA PV MARKET
CAL, NJ & ONT PROMOTION PROGRAMS SUMMARY
ELECTRICAL TARIFF PHOTOVOLTAICS PROMOTION PROGRAMS
(Average approximation*) (United States)
US FEDERAL 30% INVESTMENT 5 YEAR ACCELERATED
PROGRAMS TAX CREDIT (GRANT) AMORTIZATION TIME
CALIFORNIA CALIFORNIA SOLAR INITIATIVE (0,05$* per Kwh for 5 years)
STATE 16,63 cents per kWh. CALIFORNIA FIT (from 0,08 to 0,10 per Kwh in 2010)
PROGRAMS SALES TAX EXEMPTION PROPERTY TAX EXEMPTION
NEW JERSEY REIP INCENTIVES (<50kW) 1$ per W.
STATE 13,35 cents per Kwh. RENEWABLE ENERGY CREDITS (1 per Mwh) ave. Value 588,96$
PROGRAMS SALES TAX EXEMPTION PROPERTY TAX EXEMPTION
CAN FEDERAL EcoENERGY REBATES 1 CAN CENT per kWh.
PROGRAMS ACCELERATED CAPITAL COST ALLOWANCE (amortization)
ONTARIO STATE
7,5 CAN cents per kWh. ONTARIO FIT (from 53,9 to 71,3 CAN cents per kWh on rooftop PV)
PROGRAM
* Average commercial rates.
16. CALIFORNIA PV MARKET
Federal support programs (1)
- Business Energy Investment Tax Credit (ITC):
- Corporate Tax Credit for 30% of the investment. Credits are available for eligible systems placed
in service on or before December 31, 2016:
- The credit is equal to 30% of expenditures, with no cap. Eligible solar energy property includes
equipment that uses solar energy to generate electricity.
- The energy property must be operational in the year in which the credit is first taken.
- The American Recovery and Reinvestment Act of 2009 allows taxpayers eligible for the federal
renewable electricity production tax credit (PTC) to take the federal business energy investment
tax credit (ITC) or to receive a grant from the U.S. Treasury Department instead of taking the PTC
for new installations. The new law also allows taxpayers eligible for the business ITC to receive a
grant from the U.S. Treasury Department instead of taking the business ITC for new installations.
Source: http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US02F&re=1&ee=0
17. CALIFORNIA PV MARKET
Federal support programs (2)
- Modified Accelerated Cost-Recovery System (MACRS):
- Five year time accelerated amortization period for photovoltaic
installacions.
- The 5 year amortization will be as follows:
Year 1: 30%
Year 2: 32%
Year 3: 19,2%
Year 4: 11,52
Year 5: 11,42%
Year 6: 5,76
- Amortization starts when turning on the PV system.
Source: http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US06F&re=1&ee=0
18. CALIFORNIA PV MARKET
California Solar Initiative (CSI)
- Program overseen by CPUC and providing incentives to customers in investor-owned
utility (IOU) territories of Pacific Gas and Electric Company (PG&E), Southern
California Edison (SCE), and San Diego Gas & Electric (SDG&E).
- These three utilities represent about 68 percent of California’s electric load. The CSI
provides cash back for solar energy systems for existing homes, as well as existing and
new commercial, industrial, government, non-profit, and agricultural properties – within
the service territories of the three above-listed IOUs.
- The CSI has a budget of $2,167 million over 10 years, and the goal is to reach 1,940
megawatts (MW) of installed solar capacity by 2016.
- The incentive levels available through the GM CSI Program are divided into 10 "steps".
Each step is for a targeted amount of MWs. As the program receives reservations in
each step, it works towards the "trigger" when the next step (i.e., a lower incentive l
level) is offered. The incentive levels available reduce automatically over the duration of
the program based on the volume of MW of solar reservations issued.
Source: http://gosolarcalifornia.ca.gov
19. CALIFORNIA PV MARKET
California Solar Initiative targets & steps
Source: California Solar Initiative Handbook
23. CALIFORNIA PV MARKET
California Solar Initiative limitations
- No project can receive total incentives (CSI plus other programs) that exceed total
eligible project costs. Total project costs include: equipment, engineering, construction,
interconnection, building permits, maintenance and warranty costs.
- Funding will be reserved to applicants for commecial projects for a maximum of 18
months.
- Maximum 1MW installations (up to 5MW if prorated).
- Funding reservation requires payment of an application fee (non refundable):.
Source: California Solar Initiative Handbook
25. CALIFORNIA PV MARKET
California Solar Initiative administrative process
- CSI works through a five step process:
a) Energy efficiency self-audit
b) Select solar contractor
c) Apply for incentives
d) Install the system
e) Claim incentives
26. CALIFORNIA PV MARKET
Feed-in tariff (FIT)
- Due to the low rates offered most PV installations in California are
for self-consumption or use net-metering. The California FIT
program has not had a real market impact.
- All investor-owned utilities and publicly-owned utilities with 75,000 or
more customers must make a standard feed-in tariff available to their
customers.
- Up to 3MW projects for the major utilities (SCE, PG&E and SDG&E).
- Contract terms: 10 / 15 / 20 years.
- Not compatible with California Solar Initiative (CSI) or any other similar
program.
- Requires automatic transmition of Renewable Energy Credits (REC).
27. CALIFORNIA PV MARKET
Feed-in tariff rates
- Prices will be adjusted to Market Price Referent at time of contract and
Time of Delivery of the energy* (not inflation indexed).
*http://docs.cpuc.ca.gov/PUBLISHED/FINAL_RESOLUTION/111386.htm
28. CALIFORNIA PV MARKET
Feed-in tariff rates (PG&E* TOD adjustment table)
*http://www.pge.com/includes/docs/pdfs/b2b/wholesaleelectricsuppliersolicitation/Feedin_Tariffs_FAQs.pdf
29. CALIFORNIA PV MARKET
PACE (Property-Asessed Clean Energy)
- A locally managed program allowing a loan for PV investments
(up to 20 years and low interest rate) to be repayed through a
property tax increase. The loan is attached to the property and
will stay with it in case of a sale.
- Any futher specification depends on local government (counties
& municipalities).
- Available at:
*All PACE programs have been temporarily suspended after a statement by the
Federal Housing Financial Agency on July 2010.
30. CALIFORNIA PV MARKET
Sales tax exemption for solar energy systems
- SB 71 of 2010 established an exclusion from the state's sales
and use tax for expenses related to the design, manufacture,
production, or assembly of renewable energy equipment, in
California.
- The legislation defines renewable and energy broadly to
include "solar, biomass, wind, geothermal, hydroelectricity under
30 megawatts, or any other source of energy, the efficient use of
which will reduce the use of fossil and nuclear fuels."
31. CALIFORNIA PV MARKET
Property tax exclusion for solar energy systems
- Section 73 of the California Revenue and Taxation Code allows
a property tax exclusion for certain types of solar energy
systems installed between January 1, 1999, and December 31,
2016.
- Qualifying active solar energy systems are defined as those
that "are thermally isolated from living space or any other area
where the energy is used, to provide for the collection, storage,
or distribution of solar energy." These include photovoltaic (PV)
systems.
- System owners should contact the applicable county assessor's
office for further information.
32. CALIFORNIA PV MARKET
Competitors & business models
- A quick look at competitors shows different business models present in the
commercial rooftop photovoltaics market.
- Analized competitors:
> Akeena Solar: http://akeena.com
> Borrego Solar: http://borregosolar.com
> K2 Solar: http://k2solar.com
- Most strong competitors have permanent alliances with both a financial and a
roofing contractor partner to boost their operations (Example: K2Solar graphic).
- Two basic business models*:
a) Full site-host ownership (through lease or other financial tools)
c) Power Purchasing Agreement (PPA)
*Tax benefits being the main issue.
36. CALIFORNIA PV MARKET
Business model: Power Purchase Agreement (3)
- The site host neither owns nor leases the PV system, but instead agrees to buy all of
the electricity generated by the system for a specified term, through what is known as a
power purchase agreement (PPA).
- The project developer either owns (in partnership with it stax investors) or leases (from
its tax investors) the system, and is responsible for operating and maintaining it
throughout the entire PPA term.
- The project developer (and its tax investors) take on the risk that the project does not
perform as expected – i.e., the site host only pays for power that is actually generated.
As the owners of the project, the project developer and/or its tax investors take all of
the project’s tax benefits (and, in effect, pass a monetized portion of them through to
the site host in the form of a lower PPA price).
- From the site host’s perspective, a PPA feels very much like an operating lease: The
primary difference – which reportedly is a major selling point for the PPA10 – is that,
under a PPA, the site host is not required to operate and maintain the system, and
likewise faces no performance risk. In short, the PPA model effectively provides the site
host what it presumably really wants – solar power at an affordable price, rather than
solar equipment that it must operate and maintain.
37. CALIFORNIA PV MARKET
Business model: Power Purchase Agreement (4)
Source: The Solar Group
39. CALIFORNIA PV MARKET
Contractors license
- Solar contractors need a valid contractors license administered by the
California Contractors State License Board.
- The C-46 Solar Contractor license covers active solar water and
space heating systems, solar pool heating systems, and photovoltaic
systems. C-46 requirements include four years of experience and
passing the business and law exam and the trade exam. Independent
license schools offer courses to prepare for license exams.
- Application time: Any application requiring an exam depends on exam
scheduling.
- A C-39 Roofing Contractor license could also be required for
photovoltaic systems installed in roofs.
More information:
http://www.cslb.ca.gov
http://www.cslb.ca.gov/Resources/GuidesAndPamphlets/BlueprintForGettingLicensed.pdf
40. CALIFORNIA PV MARKET
Timeline for coming months
- Contact Diego Belmonte (consultant) to lear about the market
SEP - Prepare an agenda of California contacts to meet during Solar Power
- Confirm assistance to Spanish networking breakfast during Solar Power
- Meet with California PV market contacts during Solar Power to learn about the market
- Attend Spanish networking breakfast during Solar Power
OCT
- Define a strategy for market penetration
- Look for potential partners
- Contact potential partners (PV installer/PV professional to start joint venture with)
NOV
- Prepare a trip to meet potential partners
DEC - Visit California and meet potential partners
JAN-FEB - Close agreement with partner and start landing
MAR-APR - Start operations. Be successful!
41. CALIFORNIA PV MARKET
PV industry associations & resources
- Solar Energy Industries Association (SEIA): http://seia.org
- Solar Electric Power Ass. (SEPA): http://solarelectricpower.org
- California Solar Electric Industries Assoc.: http://calseia.org
- California Solar Initiative (CSI): http://gosolarcalifornia.org
- California Public Utilities Commission: http://cpuc.ca.gov
- Database of Solar Incentives for Renewables: http://dsireusa.org
- Roofing Contractors Ass. of California: http://rcacal.com